Rising apartment rents played a major role in pushing the cost of living in Colorado Springs to tie a 23-year-old record when compared with the national average, according to a new report.
The local cost of living was 104% of the national average in the fourth quarter, up from 103.6% in the third quarter and tying the record reached in the second quarter of 1997, according to the Council for Community and Economic Research. The council normally releases an annual average index early in the following year, rather than a fourth-quarter calculation, so no data is available for the fourth quarter of 2019. The council plans to release its annual average late next month.
The increase was largely driven by housing prices, which jumped from 105.3% of the national average in the third quarter to 109.2% in the fourth quarter. Housing costs make up 27.5% of the overall index. Much of that gain came from a 7.8% increase from the third quarter in the monthly cost of renting a two-bedroom apartment to $1,445. Home prices didn’t play much of a role because the council measures the monthly mortgage payment for a 2,400-square-foot home, which went down $22 from falling mortgage rates, despite a 3.7% increase in the purchase price.
“The general trend in recent years has been higher and it hasn’t been much affected by” the COVID pandemic, said Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum. “I don’t see it changing, especially the double-digit increases in rents and housing prices. This frenetic pace of (increase) will lead us to a place where it gets so expensive to live here that people start to migrate out, and that might happen in the next couple years.”
Breann Preston, director of business intelligence for the Colorado Springs Chamber & EDC, cautioned against reading too much into the record cost of living, because the council encourages using new apartments as the measuring stick for rental costs. That means the rents in Colorado Springs reflect more expensive apartments completed in recent months, including pricey downtown complexes. The chamber collects the data the council uses to calculate the local index.
The index isn’t designed to be used as a measure of inflation over time; it instead is intended to be used by “moderately affluent” households to compare the cost of living when moving to another city. The index compares prices for 57 goods and services used or purchased where managers and professionals live in 274 metro areas, thus it includes more upscale apartments and single-family homes than the average resident would rent or purchase. The index also includes a different number of cities each quarter and has changed criteria several times, so comparisons over time are difficult.
“The best way to look at it is that prices here are likely slightly above the national average,” Preston said. “There is about a 5% margin or error (in the quarterly survey), so 104% would put Colorado Springs somewhere just below the national average to slightly above the national average, so it is right on the cusp of an observable (significant) difference” from the national average.
Index components measuring grocers and miscellaneous goods and services also rose slightly, while components measuring utilities and transportation dropped sharply and the health care component fell slightly. The overall index increased because the components that increased make up more than three-fourths of the total.
The cost of living in Colorado Springs has increased more than 10 percentage points in the past four years, making the area significantly more expensive than any of the other five finalists for the U.S. Space Command. President Donald Trump ordered the command last week to move to Huntsville, Ala., where the cost of living was 90.3% of the national average in the fourth quarter, the lowest of all six cities.
Elsewhere in Colorado, the cost of living increased during the fourth quarter in the three other metro areas included in the council’s survey — Denver was at 114.5% of the national average, Grand Junction was at 104.1% and Pueblo was at 94.7%, all driven by rising housing prices. New York had the nation’s highest cost of living at 237%, while Harlingen, Texas, had the lowest at 73.2%.
A report from the U.S. Bureau of Economic Analysis found prices in Colorado Springs in 2019 were still below the national average but increased 2.3% that year, or well above the national inflation rate of 1.5%. That gain also was driven by housing costs, which increased 2.9% in 2019 to put those costs at 11.4% above the national average. The federal agency calculates inflation data for metro areas as part of a report on inflation-adjusted incomes to compare buying power across states and metro areas.